VAT payment deadlines & small traders. A warning. (Long)

You need Dennis - our resident VAT expert.

On a similar subject, did you say you were thinking of changing to a Ltd. Company?

My plasterer mate is doing it now (mainly as he never pays his bills, and the bailiffs have been round to scare him into paying up).

I've been doing some research into it, and it can be done really cheaply now, with no need to use an Accountant for anything (even year end returns) for a small business.

You can set it up for less than £50, then there is a little more paperwork, as you need to pay employee tax and NI, but there are some good benefits - full pension and benefits, less tax overall, very little chance of personal bankruptcy if the business fails etc.

Alan.

I did it for tax reasons. My accountant set it up for about £60.

I no longer trade nor dabble in VAT but I wonder if you may have misremembered the past position? It was, and I think still is, the case that electronic filing and payment means you have an extra 7 days for HMRC to receive clear funds. (Note that what matters is not when you send the payment but when HMRC receive it clear in their account.) So with paper returns & payment you had to get th emoney into their hands by the end of the month. With electronic you get the extra days. But you may still have to send the payment sooner if, eg, you are using BACS rather than FastPay.

There's a calculator somewhere on the HMRC site which is supposed to give a date - ah yes, it's

So, where on your website does it say that you are a limited company trading as The Medway Handyman and where are your company registration details?

Have you started trading under the Ltd. Co. yet? If so, is the extra paperwork simple to do - say half hour a week?

Did you transfer your stock/tools/van to the Ltd Co.? If not, did/will you have an extra tax bill when you cease trading as a Sole trader?

I've probably got £5k of kit, so it'd cost me £1250 ish to close down the Sole Trader I think, though maybe I'm completely wrong about it?

Ta Alan.

I just let them take it by D.D. once I have submitted the VAT100 figures through their electronic online form thing. As far as I'm aware they still take it on the last day of the 7 days grace... Last quarter ending last day Jan. was taken by DD on March 12th so I reckon quarter Feb-Apr. will be taken on 11th June.

No reason it shouldn't.

Pete

In article , Robin writes

It certainly used to be the case that if you paid by direct debit and filed online you got 7 days grace but it is now compulsory to file online for all but the smallest companies so they might be looking to remove that benefit of online filing.

It appears the o/p is paying by funds transfer rather than DD so that may make a difference.

I'll certainly take a closer look on Monday but hey it's the wkend so it can wait.

Thanks to the o/p for the heads-up tho'.

They might also be looking to castrate/inflict FGM on anyone who pays late but I don't think they are*. See the calculator to which I posted a link or the guidance at

I was unclear by what means the OP was paying. If "Banco Franco Billpay" was a reference to the Billpay facility operated (now) by Santander then tweet, tweet. Billpay is not and never was the swiftest (sic) method. Billpay requires payment by 31 May to get cleared funds to HMRC bvy 7 June. (I think this is affected by the double holiday weekend. Eg Billpay on 3 July will get funds to HMRC by 6 July.)

FWIW I also seem to recall that a lot of businesses receiving payments also used to get a bit upset if their customers used delaying tactics. And I well recall a big oil company which, many years ago, pointed out how much they could have saved if they had paid their tax due by (say) 31 May by posting a cheque using second class post in Lerwick after the last collection of 31 May. I don't see that as fair. But then, like Zaphod Beeblebrox, I'm just zis guy, you know.

*what some HMRC officials wish for in the privacy of their heads is of course unknowable :))

In message , DerekG writes

This last quarter, I submitted the return on the 7th April The amount due was taken by DD from our account on the 10th (tuesday), which at 0:00 of the 10th didn't have sufficient funds to cover the VAT

09:30 I topped up the current account, sometime in the afternoon, the bank clawed the VAT back (Wankers)

I phoned HMR&C up and, yes, the money had briefly rested in their account. I said I'd check it out on Saturday, O transferred the money over monday and tuesday (as it was more then £20000), so they finally got their money on the 17th April

no fines or requests for extra payments have been made

from this you can, hopefully draw a few conclusions

1/ - the return has to indeed be submitted by the 7th (as they say in their reminder, 2/ - If you pay by DD, it does indeed go out on the 10th 3/ - If you have a problem, inform them ASAP

That catches a few people out, the IR estimated one of my customers assets to be £100,000 and sent him a bill for it when he went ltd

It was up to him to prove it incorrect

Watch out !

The lost interest on 20k @ 2% is hardly worth worrying about. If I've got the maths right it's less than eight quid before tax. That's assuming you have an instant access account that pays as much as

2%...

FastPay? NatWest closed that on the 15th July 2005.

Perhaps he means Faster Payments:

But what's the point of any other system than DD?

They're going to take the money anyway, why not leave the responsibility to them ?

Yes, a shameful error by me

A sole trader and the company can elect to transfer tools and other plant and machinery at their written down value for tax purposes so as not to trigger balancing charges on them. They can also elect to have trading stock and work in progress transferred so as to avoid triggering a tax charge. And there is an "incorporation relief" for capital gains. But there are other ways of people can get a tax bill they don't expect on "cessation" so the general point stands.

On 26/05/2012 10:31, Robin wrote: ...

HMRC are not part of the fast payment scheme, so it will take several days for any electronic transfer to reach them.

Colin Bignell

They are ... but I think there are limits on the value of transactions for FPS, so beware

You trust the government (of any colour) to have open access to your bank account? With large variable amounts I like to be in charge of when it leaves may account, otherwise it's easy to get caught by the DD going out before a credit has arrived even if they are supposed to be on the same day. Hum, now where have I heard that story recently? B-)